An MPC value of less than 1.0 indicates that as income increases consumption
A. also increases, and by more than the increase in income.
B. will go in the opposite direction and decrease.
C. also increases, though not as much as income.
D. also increases, and at the same rate as the increase in income.
Answer: C
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Under the least squares assumptions (zero conditional mean for the error term, Xi and Yi being i.i.d., and Xi and ui having finite fourth moments), the OLS estimator for the slope and intercept
A) has an exact normal distribution for n > 15. B) is BLUE. C) has a normal distribution even in small samples. D) is unbiased.
In cost-benefit analysis, a low discount rate tends to favor projects with relatively ____ lives
a. short b. long
Since the 1980s, the share of measured income received by the lowest fifth of families has risen
a. True b. False Indicate whether the statement is true or false
Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending:
A. NoName U because the annual cost is only $20,000. B. Elite U. C. NoName U because he has a full scholarship there. D. State College.